According to Cointelegraph, a new bill introduced by U.S. Representative Don Beyer on September 28, the 'Off-Chain Digital Commodity Transaction Reporting Act,' aims to require cryptocurrency service providers to report all off-chain transactions to a repository registered with the Commodity Futures Trading Commission (CFTC). The legislation seeks to protect cryptocurrency investors from disputes, manipulation, or fraud potentially arising from off-chain transactions, which are not instantly logged on a blockchain but are processed through secondary layers, making them difficult to track.
The bill highlights that thousands of transactions occur off-chain and are unrecorded on the publicly viewable blockchain due to the emergence of trading platforms and the desire to increase transaction times and lower costs. Beyer noted that internal record keeping among private entities can vary significantly, leaving investors and consumers vulnerable to fraud and manipulation. The bill aims to restore transparency and confidence in the digital asset market.
Under the proposed legislation, crypto service providers would be required to report all off-chain transactions within 24 hours to a CFTC-registered trade repository. The requirements are similar to the rules for virtually all securities and swaps transactions. This comes as U.S. lawmakers have been increasingly focused on cryptocurrency regulations, with nine U.S. senators recently adding their support to Senator Elizabeth Warren's Digital Asset Anti-Money Laundering Act, which aims to crack down on noncustodial digital wallets and extend Bank Secrecy Act responsibilities, among other legal measures, to combat the illicit use of digital money.
